Inflation has been rising at a record pace in recent months. And the Fed plans to raise interest rates after each of its scheduled FOMC meetings. The average rate for a 30-year fixed-rate loan fell 0.31 percentage points, down to 4.99%, according to Freddie Mac's weekly survey. Your creditworthiness, debt-to-income ratio, and down payment factor in the rate your lender will give you on your mortgage.
Global events, such as the COVID-19 pandemic and the Russian invasion of Ukraine, affect mortgage interest rates. Average rates for a 30-year fixed-rate mortgage have already risen to 5.81% at the end of June, but have since stabilized at 5.30% as of July 28, according to Freddie Mac. It doesn't make sense to refinance every time rates drop a little because mortgage charges would reduce your savings. When interest rates rise, reflecting changes in the economy and financial markets, so do mortgage rates and vice versa.
Many of the best mortgage refinance lenders can give you free rate quotes to help you decide if the money you would save in interest justifies the cost of a new loan. Average mortgage rates are usually about 1.8 percentage points higher than the 10-year promissory note yield. The average weekly mortgage rate for a 30-year fixed term has risen to 5.3% as of June 28, compared to just 3.22% at the beginning of the year. If the experts are right and mortgage rates continue to rise throughout the year, you may not find a cheaper time to refinance.
While the Fed's second consecutive interest rate hike of three-quarters of a percentage point seems to lead to a rebound in mortgage rates, concerns about a recession have stalled increases for now. A good mortgage rate is one where you can comfortably pay monthly payments and where the other loan details fit your needs. The central bank began raising the benchmark interest rate in March, and in July it raised rates 75 basis points for the second time this year. Some say that refinancing can make sense if it can lower the mortgage rate by as little as 0.5 percentage points (for example, from 3.5% to 3%).
Mortgage interest rates also depend on lenders analyzing your personal finances and other personal factors, such as the amount you plan to borrow, payment term, employment status and income, debt-to-income ratio, and credit score. Your mortgage rate can make a big difference in the amount of housing you can afford and the size of your monthly payments. Mortgage Market Pain Only Worsens as Higher Interest Rates and Inflation Hit U.S. Consumers.
